Asset-Based Lending

Gibraltar builds asset based revolving lines of credit and equipment term loans up to $20 million based on approved asset balances such as commercial accounts receivable, raw and finished goods inventory, and machinery & equipment.

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Frequently Asked Questions

Asset-based lending is the practice of providing a business loan secured by collateral (assets). When a company cannot qualify for a traditional commercial loan due to its cash flows or financial performance, one financing alternative may be an asset-based loan. While company performance is a factor in underwriting an asset-based loan, the focus for repayment of the loan is on the prospective borrower’s assets.

Generally, asset-based financing is available to businesses with assets that can be pledged as collateral and that are not able to obtain financing from traditional sources.

Gibraltar finances private and public U.S. companies across all industries.

Requirements include:

1+ year in business

$10MM in minimum annual revenue

Capital needs from $2MM to $20MM

Since asset-based lending emphasizes the value of accounts receivable, inventory, equipment or other assets, it does tend to be a solution that is more common for asset-rich businesses like manufacturing, business services, and distribution businesses.

A borrowing base is a formula-driven approach to setting borrowing availability under an asset-based financing structure. Advance rates are set for various asset classes and eligible and ineligible collateral line items are defined. Typically, clients are required to prepare a borrowing base certificate to support availability and advance requests along with supporting reports at periodic intervals established between the borrower and lender. Asset-based lenders inspect ledgers and assets regularly to determine and update the value of the borrowing base.

Closing time varies greatly by company and situation. Gibraltar takes pride in our ability to react quickly to our customers’ needs. We provide an initial proposal within 24 hours of receipt of the required financial documents.

Once a prospective borrower signs a proposal, the formal underwriting process begins. Due to the collateral-heavy nature of the financing arrangement, there are collateral audits and field exams that need to take place that require scheduling and time commitment from the prospective borrower. There may also be requirements for appraisals depending on the collateral involved. Lastly, there is a detailed financial statement and business review that will take place. When all parties are responsive, this process can be completed in under 30 days.

It is important to understand every aspect of a pricing proposal. As a customer-focused provider, Gibraltar recommends basing your decision on several factors – not solely on cost. Gibraltar considers what a specific client is looking for and weighs it against the risks associated with the transaction to determine the cost.

As in most financing situations, the less risky the deal, the lower the price. And the reverse is true as well. Regardless of the scenario, Gibraltar is consistently competitive on price. Our team is happy to do price comparisons and calculations upon request.

If you are interested in learning more about how an asset-based loan can benefit your business or a company with which you work, please call us today to see how we can tailor a capital solution that really fits.

Testimonials

“The Gibraltar team is uniquely able to match the needs and concerns of an equity owner with the solutions of a debt partner. We have secured working capital funding for two of our portfolio companies through Gibraltar. They understand, structure and expertly manage to the dynamic needs of companies at this end of the middle market.”Sayles Braga, Alerion Partners

“Gibraltar helped us grow. We needed financial flexibility for special circumstances like the Chinese New Year because so much of our manufacturing came out of the Far East. Gibraltar never faltered and proved to be an invaluable partner to us.”Jack Lawson, Co-Owner and CFO, Connor Corp.

“From the beginning, Gibraltar demonstrated its strengths by proposing a creative loan structure customized to our client’s needs. Throughout the process, the Gibraltar team was flexible, engaged and easy to do business with.” Ron Nayot, Diversis Capital

“We were in need of a creative solution to ramp up substantial raw materials and move into the actual production process.Gibraltar Business Capital came up with a flexible and made-to-order financial plan in very short order.”Dave Herbener, Founder, KDH Defense Systems

Sponsor-Backed Facilities

At Gibraltar, we understand the unique needs of financial sponsors and their portfolio clients. We have a collaborative, easy to work with team and flexible solution that enable us to help when other funding sources are limited. Read about about how we recently stepped in to meet the needs of a sponsor-owned company when other financing alternatives fell short.